Income Beginner: Introduction to Deposit Accounts

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1.
The simplest kind of deposit account to set up and maintain is a _______.
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Passbook account. A passbook account is easy to start, offers immediate access to funds, and requires low minimum balances.
2.
High-balance deposit accounts typically charge penalties for early withdrawal.
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False. Your money is always available.
3.
Deposit accounts can be appropriate for investors with low risk tolerance.
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True. The high degree of security they provide make deposit accounts an effective alternative for those who can't afford to lose their capital.
4.
Funds 'swept' from your asset management account are deposited into _______.
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A money market account. This lets unallocated funds earn a higher rate.
5.
Because deposit accounts pay relatively low yields, investors have little need of them.
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False. Deposit accounts can be useful tools for accumulating investment capital, sheltering funds during market downturns, and maintaining a supply of liquid cash.